Rising Tensions in the Persian Gulf

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MPMalloy
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Re: Rising Tensions in the Persian Gulf

Post by MPMalloy » Sat Sep 14, 2019 12:36 pm

absinthe beginner wrote:
Sat Sep 14, 2019 9:38 am
Massive Fires Erupt After Drone Strike Hits World's Largest Oil Processing Facility In Saudi Arabia

https://www.zerohedge.com/geopolitical/ ... lity-saudi

Drone attacks on 2 Saudi Aramco oil facilities spark fires

https://www.aljazeera.com/news/2019/09/ ... 00472.html

Saudi Arabia shuts down half its oil production after drone strikes.

https://www.wsj.com/articles/drone-stri ... 1568443375

Saudi Arabia oil facilities ablaze after drone strikes

https://www.bbc.com/news/world-middle-e ... ting-story
Two more stories:

From Bloomberg: Saudi Oil Output Cut in Half After Drones Strike Aramco Site

From Oilprice.com: $100 Oil? Drone Strikes Halt Half Of Saudi Crude Production

Magnitude=length of shutdown. Remember, SA is the 'swing producer'.

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Re: Rising Tensions in the Persian Gulf

Post by Stercutus » Sat Sep 14, 2019 3:18 pm

That is extremely bad news for the Saudis. My bet is they are feverishly plotting escalation or extraction. There won't be any middle ground. One well lit match and it could be game on between Iran and the Gulf States. There won't be any winners from that conflict and there will be plenty of losers.
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Re: Rising Tensions in the Persian Gulf

Post by absinthe beginner » Sat Sep 14, 2019 4:34 pm

The plot thickens....

The big drone attack on Saudi oil facilities was launched by Iran-backed Yemeni Houthis from… Iraq

https://www.debka.com/the-big-drone-att ... from-iraq/

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Re: Rising Tensions in the Persian Gulf

Post by absinthe beginner » Sat Sep 14, 2019 6:11 pm

Secretary of State Pompeo has blamed Iran - not Huthi rebels in Yemen - for the "unprecedented" drone attack on Saudi Arabian oil infrastructure.

I think the stakes just got a lot higher. Time to top off our gas tanks, my peeps.

Oil To Hit $100? Pompeo Blames Iran For "Unprecedented" Drone Attack That Crippled Largest Saudi Oil Processing Facility

https://www.zerohedge.com/geopolitical/ ... lity-saudi

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Re: Rising Tensions in the Persian Gulf

Post by MPMalloy » Sat Sep 14, 2019 6:56 pm

absinthe beginner wrote:
Sat Sep 14, 2019 6:11 pm
Secretary of State Pompeo has blamed Iran - not Huthi rebels in Yemen - for the "unprecedented" drone attack on Saudi Arabian oil infrastructure.

I think the stakes just got a lot higher. Time to top off our gas tanks, my peeps.

Oil To Hit $100? Pompeo Blames Iran For "Unprecedented" Drone Attack That Crippled Largest Saudi Oil Processing Facility

https://www.zerohedge.com/geopolitical/ ... lity-saudi
$2.38/US Gal - 10% Ethanol on Saturday, September 14th, 2019 @ 1415 hrs.

From Reuters: Instant View: Reactions to attack on Saudi oil facilities

I can't disagree with the views in the article.

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Re: Rising Tensions in the Persian Gulf

Post by absinthe beginner » Sat Sep 14, 2019 6:58 pm

Oil markets don't open until Sunday evening, so no telling how this attack is going to impact oil prices. I suspect oil and gold are both going to pop.

Wall Street Journal: This Is the Big One.

https://www.wsj.com/articles/saudi-oil- ... 1568480576

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Re: Rising Tensions in the Persian Gulf

Post by Stercutus » Sat Sep 14, 2019 7:03 pm

absinthe beginner wrote:
Sat Sep 14, 2019 4:34 pm
The plot thickens....

The big drone attack on Saudi oil facilities was launched by Iran-backed Yemeni Houthis from… Iraq

https://www.debka.com/the-big-drone-att ... from-iraq/
Millions of soldiers and marines everywhere are saying "I told you so".

The media will find some dumbass "veterans advocate". He will complain he feels betrayed by all of this and that someone needs to do something about all this while they sling mud at whoever their favorite political target is. Hint - He was the guy who always showed up to the convoy briefing late, in the wrong uniform and flagged everyone while on patrol every time until they sent him to work in the ops center making coffee. The guy from ABC News was always quoting him as an "anonymous source" because he was the only one who would talk to reporters.

ETA - That is about 11% of the oil output of the entire world. I am sure Raptor could get more scientific but the market is going to go completely ape shit on Monday.
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Re: Rising Tensions in the Persian Gulf

Post by MPMalloy » Sat Sep 14, 2019 8:05 pm

Stercutus wrote:
Sat Sep 14, 2019 7:03 pm
ETA - That is about 11% of the oil output of the entire world. I am sure Raptor could get more scientific but the market is going to go completely ape shit on Monday.
SA says the fires are out. I'll try to get more info.

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Re: Rising Tensions in the Persian Gulf

Post by MPMalloy » Sat Sep 14, 2019 8:06 pm

absinthe beginner wrote:
Sat Sep 14, 2019 6:58 pm
Oil markets don't open until Sunday evening, so no telling how this attack is going to impact oil prices. I suspect oil and gold are both going to pop.

Wall Street Journal: This Is the Big One.

https://www.wsj.com/articles/saudi-oil- ... 1568480576
Paywall. Can anyone post a snippet?

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Re: Rising Tensions in the Persian Gulf

Post by absinthe beginner » Sun Sep 15, 2019 9:51 am

Saudi oil attacks: Will fuel prices go up?

https://www.bbc.com/news/business-49708220

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Re: Rising Tensions in the Persian Gulf

Post by Stercutus » Sun Sep 15, 2019 2:45 pm

MPMalloy wrote:
Sat Sep 14, 2019 8:05 pm
Stercutus wrote:
Sat Sep 14, 2019 7:03 pm
ETA - That is about 11% of the oil output of the entire world. I am sure Raptor could get more scientific but the market is going to go completely ape shit on Monday.
SA says the fires are out. I'll try to get more info.
That's awesome. However putting out the fires is only step one in a multi-step process of pumping oil.

And there is nothing to prevent further attacks.
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Re: Rising Tensions in the Persian Gulf

Post by MPMalloy » Sun Sep 15, 2019 5:00 pm



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Re: Rising Tensions in the Persian Gulf

Post by Stercutus » Sun Sep 15, 2019 8:09 pm

IT's up 19% now. I'd say that qualifies as "going ape shit".

The big question for the US is does that help us or hurt us? 15 years ago it would have caused an immediate recession. These days I am not so sure. It may even be helpful.
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Re: Rising Tensions in the Persian Gulf

Post by woodsghost » Sun Sep 15, 2019 8:28 pm

I imagine Texas and the Dakotas will be spinning up. I imagine that will help the US economy. Probably help Iran too.
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Re: Rising Tensions in the Persian Gulf

Post by Stercutus » Mon Sep 16, 2019 6:19 am

woodsghost wrote:
Sun Sep 15, 2019 8:28 pm
I imagine Texas and the Dakotas will be spinning up. I imagine that will help the US economy. Probably help Iran too.
Doubtful on Iran. They have dropped do much over the years that they export just a little bit more than the UK.
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Re: Rising Tensions in the Persian Gulf

Post by MPMalloy » Mon Sep 16, 2019 11:58 am

It's all over my Bloomberg feed. I'm glad I filled my tank yesterday. On Daybreak, an analyst said it will be 'around' 48 hours before SAhas an idea of how long it will be before they are back to full production. The analyst 'gueesed' at several weeks to several months.

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Re: Rising Tensions in the Persian Gulf

Post by raptor » Mon Sep 16, 2019 12:45 pm

One thing to remember here. The USA is actually a large exporter of oil, recently it surpassed the Saudis.
This is event will not have the same impact as say the oil embargo of the 70's. (Unless of course there is a major escalation of hostilities)

Note the price of crude is up but LA and MX light crude is already in full retreat from the initial blip.

https://oilprice.com/oil-price-charts

I am not saying this will not roil the markets only that this is a huge buffer for the US market.

https://www.eia.gov/todayinenergy/detail.php?id=37053

https://www.msn.com/en-us/money/markets ... li=BBnb7Kz

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Re: Rising Tensions in the Persian Gulf

Post by Stercutus » Mon Sep 16, 2019 12:56 pm

They are saying now likely several months, however they are releasing some of their stockpile which is
less than 40 days of exports. So it appears as though Iran has followed through with their threats.

The Saudi led Sunni Gulf State Coalition is not powerful enough to take on Iran. I'd say at this point it is practically inevitable that the US will get drawn in to the conflict in some role, beyond what they are already doing in Yemen.

Iran has been preparing for this moment since 1979. It remains to be seen how well they have prepared.

The issue with the Gulf States is that they have built lots of expensive targets to shoot at. Between giant buildings, Ferrari World and artificial islands there are simply too many expensive non-military targets for Iran to follow the laws of land warfare and ignore. If war full scale war comes it will likely be an exercise in brutality unlike any we have seen since Cambodia.
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Re: Rising Tensions in the Persian Gulf

Post by raptor » Mon Sep 16, 2019 2:41 pm

These folks have a viewpoint that different from my "meh" viewpoint.

https://www.investors.com/news/crude-oi ... yptr=yahoo
Either way, markets are waking up to a new reality: What was once seen as one of the world's most stable supplies of oil and as a stabilizer of global crude oil prices has since been shown to be exceptionally fragile.

"No matter whether it takes Saudi Arabia five days or a lot longer to get oil back into production, there is but one rational takeaway from this weekend's drone attacks on the kingdom's infrastructure — that infrastructure is highly vulnerable to attack, and the market has been persistently mispricing oil," Ed Morse, Citigroup's global head of commodities research, wrote in a note.
Note the mispricing comment. Read the risk premium just increased.

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Re: Rising Tensions in the Persian Gulf

Post by Stercutus » Mon Sep 16, 2019 5:38 pm

The bottom line is: How far will the Gulf States go to protect their lifeblood?

Iran is counting on them backing down and lying down. I don't think that this calculation is correct. If the Gulf States, Iraq and Iran get caught up in a full scale war the shocks to the world's energy supply will be like nothing we have ever seen. It will make the 70s embargos look like good times in Europe.

Iran opened the door to reciprocal attacks and given the prevailing attitudes of leadership in the ME and the way respect works, I will be shocked if they don't suffer retaliation.
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Re: Rising Tensions in the Persian Gulf

Post by raptor » Mon Sep 16, 2019 5:55 pm

Stercutus wrote:
Mon Sep 16, 2019 5:38 pm
The bottom line is: How far will the Gulf States go to protect their lifeblood?

Iran is counting on them backing down and lying down. I don't think that this calculation is correct. If the Gulf States, Iraq and Iran get caught up in a full scale war the shocks to the world's energy supply will be like nothing we have ever seen. It will make the 70s embargos look like good times in Europe.

Iran opened the door to reciprocal attacks and given the prevailing attitudes of leadership in the ME and the way respect works, I will be shocked if they don't suffer retaliation.
I think Crown Prince Mohammed bin Salman, ("MBS") has shown that he is not afraid of doing what he thinks is best for the House of Saud. I suspect that the Iranians know this. That is why they used the Yemeni Houthi for a proxy attack. The Iranians are fond of proxies and with good reason. It makes sense to have deniability.

IMO opinion any attack on Iran will be though proxies and not direct strikes by the Saudis. They have too much to lose by being direct. The next question is who will be that proxy?

The likely suspects:
1.) The USA
2. ) Israel
3. )Iraq
4.) Kurds
5.) Iranian dissidents

The US would be more likely to impose economic and technological sanctions than a strike.

Israel is more likely to strike the nuclear enrichment facilities for their own reason. The house of saud may facilitate such a strike by turning off radar on the path needed to get to Iran.

Iraq and the kurds are wild cards but I suspect that they do not want the trouble ven for money from the House of Saud.

Now #5 would be a great tit for tat...perfect deniability material there.

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Re: Rising Tensions in the Persian Gulf

Post by woodsghost » Mon Sep 16, 2019 6:59 pm

Just repeating some folks I listen to, but I wonder if the Sauds will send their own air strikes and allow Israel to strike Iran too. It makes the most sense to me.
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Re: Rising Tensions in the Persian Gulf

Post by Stercutus » Mon Sep 16, 2019 7:26 pm

IMO opinion any attack on Iran will be though proxies and not direct strikes by the Saudis. They have too much to lose by being direct.
We are still in the proxy fight stage but it does not have to stay there.

I don't think the US can do much more with sanctions than they are already doing. They can step it up with a variety of military and military and intelligence support options but the real question is will they go kinetic? I am not going to get in to all the secret dealings that were going in during the Iraq War, but the political situation in the region is far different in perception than reality.

Israel offers some fascinating options as they have warmed up (the enemy of my enemy is not my enemy type thinking) to the Saudis lately. They are a fraction of the size of Iran in every way even though their military is robust. Their ability to project force is at best limited. Without direct help from the Sauds (air field use) they won't be able to do much.

Iraq's military is no match on any level for Iran. If they play any direct role in opposition to Iran, Iran will likely take Baghdad in about two weeks. The amount of air power the US would have to use to stop them would be prohibitive. But Iran is much more likely to use Iraq as a proxy than the other way around.

The Kurds are doing their own thing. IF they see an opportunity from an otherwise occupied Iran they will jump on it. The only thing they like more than killing Arabs is killing Persians....
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